This time around market players are expecting to consumer prices to level from 0.5% to a 0.4% growth in Q4 2017. Will food prices rise enough to boost overall prices again? More importantly, will reaction to the report dictate Kiwi’s price action for long?

Overall risk appetite

As mentioned in the review below, Kiwi mostly traded at the mercy of risk appetite.

If traders once again choose to focus on top-tier market themes, then y’all better keep your eyes peeled for events such as BOJ and ECB’s policy decisions and U.S. and U.K.’s GDP releases. Oh, and keep your eyes peeled for updates on the U.S. government shutdown, will you?

Last Week’s Price Review

The Kiwi is mixed for the week (as of 8:00 am GMT). However, the Kiwi wasn’t merely a victim to opposing currency price action since Kiwi pairs had roughly uniform price action for the most part, but diverged on Thursday. And it’s this divergence that’s the reason for the Kiwi’s mixed price action so far this week.

The latest dairy auction was held on Tuesday and that ended with a 4.9% surge in the GDT price index. However, that didn’t really do anything to stop the Kiwi’s slide at the time.

Moving on, the Kiwi later found broad-based support and began to climb back up during Wednesday’s London session. And as noted in Wednesday’s London session recap, this was very likely due to signs of returning risk appetite.

And as mentioned earlier, this divergence in Kiwi pairs is the reason why the Kiwi currently has a mixed performance for the week.

China’s GDP report was mixed but net positive overall. However, consumer spending and imports did print a slowdown. And those may have stoked speculation that demand for dairy products, New Zealand’s main commodity exports, will weaken further, dampening demand for the Kiwi in the process.

Anyhow, aside from risk sentiment, it’s also highly probable that, like the Aussie, price action on the Kiwi may have also been partially driven by the Greenback’s effect on NZD/USD and NZD/USD then pushing or pulling other Kiwi pairs with it.

Every day, I will present to you my findings and daily commentaries on what recently happened in the economic arena, possible shifts in sentiment, economic events to watch out for, and their effects on currencies.

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